Stock Commentary

Kepwealth still believes it is “prudent” to do absolutely nothing with IPO proceeds until sometime next year

Merkado Barkada
Kepwealth still believes it is âprudentâ to do absolutely nothing with IPO proceeds until sometime next year

Kepwealth [KPPI 4.05] burst onto the scene in Q3 of 2019 with an IPO that saw the stock surge 233% in its first three days of trading thanks to rumors that it was a backdoor candidate for the Hotel Sogo chain of urban “group study” hotels. Despite sharing certain directors and interests with Hotel Sogo, the rumors have yet to crystallize into something tangible for KPPI or its investors, leaving the company to do what it does best: lease office space to clients. According to KPPI’s disbursement report related to its IPO, however, the company’s business was hit hard by COVID, to the point where the company has decided that it is the “prudent stance” to wait until Q1 or Q2 of 2022 to spend any of the ?170 million that still has not been used to acquire office space in Metro Manila and Davao as per KPPI’s IPO business plan. KPPI reassures investors that all of the unused proceeds were invested in “low risk investment instruments” for safe-keeping.


Ever heard of the saying, “In the midst of every crisis, lies great opportunity”? Oh, you have? Well, you should send a note to KPPI’s board to let them know! Investors gave KPPI a huge chunk of cash in 2019 to do a very specific set of things (buy leasable space in Metro Manila and Davao), with the implied understanding that, even if those specific things weren’t done, the company would still try its best to grow given whatever changed circumstances it encountered along the way.

So, that was two years ago, then blah blah blah COVID, and here we are reading how KPPI’s management still thinks that the best course of action is to do the purchases that it planned to do before the entire world changed, but that it doesn’t feel like doing it until maybe the middle of next year.

Did KPPI not hear about this k-shaped recovery? Has KPPI missed all of the reports from real estate developers all around the country that sales are still booming? Granted, residential sales aren’t commercial sales, but I find it hard to believe that with everything that’s been happening over the past 18 months with COVID that the best use of its investors’ money is to park it in some ultra-low interest fund and just wait patiently.

I was fairly upset on KPPI’s behalf in 2019 when it looked like their IPO had been hilariously mispriced and that they had missed out on all that additional capital, but now I’m not so sure.

Now, I think the profits were probably best placed in the hands of the investors that flipped the stock for those incredible first-week gains because it doesn’t look like KPPI has much interest in doing much other than hibernating until the “commercial leasing winter” has passed.


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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.


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